Please Don’t Let Your CEO Negotiate Price

You’re on the edge of closing a huge deal. Your salespeople have done a great job of selling value. They have convinced the buyers and the users that yours is the right solution for their company. All is on track. Then, of course, purchasing gets involved to get a better deal and mostly a lower price.

Purchasing agents are well trained negotiators who know every trick in the book. They do this multiple times a week. Most importantly, they are very patient. There is no sense of urgency on them to close the deal.

Your CEO, on the other hand, wants to know why this deal hasn’t closed yet. It should be done by now. He says “take me in there and I’ll close this.” And of course he does. The purchasing agent says “all we need is another 3% and we can close this.” The CEO says “Deal!”

The CEO has the authority to close any deal. He is often impatient to have the contract in hand and he certainly doesn’t want to spend a lot of time in front of the purchasing agent. Besides, he looks like a hero when he succeeds and he looks feckless if he fails. All factors point to the CEO closing too early at too bad of a deal.

Negotiation training firms will tell you when they run pre-training exercises, executives typically perform the worst. Not that they are dumb or incompetent, but more that they are over-confident and impatient.

Of course, sending the CEO in to negotiate makes it more likely the deal will close. They will typically do whatever it takes. This means sales people are thrilled to invite the CEO in. The salespersons biggest goal is closing the sale, perfectly aligned with the CEO closing impatiently. And purchasing invites this as well. Purchasing agents often ask to have an executive come negotiate. Why wouldn’t they? Bringing in an impatient executive with the authority to give in is a surefire winner for the purchasing agent.

This means it’s you, product and pricing, against sales, purchasing and the CEO. Not a very comfortable position. The solution, have these conversations when you’re not in the throes of a big negotiation. Share this blog with them. Talk to whichever company provides negotiation training to your sales team to corroborate these claims. (I’ve heard it many times so you will inevitably find the same.)

Don’t forget, small improvements in price can lead to huge improvements in profitability. Focusing on who negotiates and making sure they are well trained is an easy way grow profits.